Strategic Management: Aldi's Strategy Formulation and Analysis

This report offers a comprehensive strategic management analysis of Aldi, a British supermarket chain. It begins with an introduction to strategic management and its importance, followed by a detailed examination of Aldi's strategic approaches, including exclusive brand products, a limited product range, customer focus, and price change policies. The report then critically assesses macro-environmental industry issues faced by Aldi, such as economic fluctuations and marketing challenges, and evaluates Aldi's responses to these issues. Furthermore, it explores the impact of these issues on Aldi's future strategy. The report utilizes Porter's Value Chain framework and VRIO analysis to assess Aldi's capabilities and competitive advantage, identifying primary and secondary activities contributing to its success. Recommendations are provided to enhance Aldi's future strategies, emphasizing market adaptation and innovation. This report provides a thorough understanding of Aldi's strategic position and recommendations for future growth.

Strategic
Management

INTRODUCTION
Strategic Management refers to the adoption of different types of strategies by the
managers of the organizations so that they are able to make sure that they can use these particular
strategies in the right manner effectively and efficiently (Bianchi, Mingo and Fernandez, 2019).
In this way they will be able to make sure that they are able to bring the appropriate conclusions
and recommendations regarding the adoption of the strategy which will help in ensuring that the
goals and objectives in the short-term, medium-term and long-term can be done in the right
manner. For this report, Aldi has been selected. It is a British Supermarket Company which
focuses on providing of a wide range of products and services to the customers in the market. In
this report, a detailed focus will be made on critical analysis of approaches to strategy
formulation, critical assessment of the issues and use of specific frameworks. Additionally, focus
will be made on critical analysis of the various types of strategies which can be used by Aldi so
that it is able to attain a competitive advantage in the market will be discussed as a part of this
assignment.
MAIN BODY
Critical analysis of the approaches
Aldi is a big retail company which operates in the market of the different countries in the
world (Bindra, Parameswar and Dhir, 2019). The focus of the organization is on ensuring that the
use of a wide range of strategies as well as techniques can be made so that the company is able to
obtain a competitive advantage in the future in the right manner effectively and efficiently. The
approaches which have been adopted by the company in the past are as follows-
Exclusive brand products- Aldi has been able to ensure that it brings out the exclusive
brand products in the market (Engert, Rauter and Baumgartner, 2016). This can be highly helpful
in ensuring that the company is able to create a good image in the market in the right manner.
This has helped the company a lot in ensuring that through the use of the different types of
techniques it can help in the attainment of the strategic and competitive advantage in the market
in a proper manner.
Limited range- Aldi has kept a limited range in the past for its products and services.
This has helped the company a lot in ensuring that it is successful in ensuring that its products
and services are able to reach the right customers in the market. In this way, this can help a lot in
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leading towards an increase in the overall level of efficiency and effectiveness for the company
in the right manner.
Focus- Aldi has ensured that it has kept a sharp focus on the customers which are
important for it. This has helped in ensuring that the focus of the company is on the wide range
of customers who can be targeted by it so that it is able to attain the different types of goals and
objectives in the right way in the future. In this way, it has helped a lot in ensuring that the focus
of the company can be kept on the attainment of the strategic edge in the future over the
competitors in the market.
Price Change Policy- Aldi has believed a lot in ensuring that the use of Price Change
Policy can be made (Favoreu, Carassus and Maurel, 2016). This has helped a lot in ensuring that
the use of different types of prices can be made in the right manner through the use of statistical
and mathematical methods and techniques. This will be quite helpful in ensuring that the
company can attain a lot of goals and objectives in the future in the right way.
Thus, it can be said that to a large extent the use of the above approaches has helped Aldi
a lot in ensuring that it is able to effectively and efficiently manage the wide range of needs and
requirements in a proper manner and therefore adopt a right way of ensuring the attainment of
the goals and objectives. The reason due to which this balance has been appropriate is that Aldi
has focused on ensuring that the use of different types of strategies and techniques can be made
according to the dynamic changes which keep occurring in the market. This will be quite helpful
in ensuring that the adjustments can be made quickly with them in the right manner so that the
goals and objectives in the future can be attained.
The recommendations for the management of Aldi so that they can transform the balance
in the future are as follows-
 For entering into the different types of market in the future, Aldi’s management has to
make sure that they are able to effectively and efficiently meet out the different needs and
requirements of the customers which will be quite helpful for the company.
 The use of Innovation has to be made quite regularly by the managers of Aldi so that they
are able to identify the new needs and requirements of the customers and develop
products and services accordingly which will help in ensuring that these products and
services are able to meet the needs and requirements of the customers in the right manner.
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The above recommendations are justified because by following them the managers of
Aldi will be able to ensure that they can effectively and efficiently meet out the wide
range of needs and requirements of the customers. Also by following them the company
can make sure that it is able to ensure that it can attain a higher-level of efficiency and
effectiveness.
It is essential that an additional support is given to the management of Aldi so that it can
ensure that it is able to identify it can develop the organizational strategies and plans in
the right manner which will be very helpful in ensuring that the conclusions and
recommendations can be derived in the right manner effectively and efficiently. In this
way, the company will be able to ensure that it can attain a competitive edge over the
wide range of competitors in the market in a right manner. Also the support from the
various organizational functions like Production, HR, Finance, Marketing etc. is essential
so that the work of the company can be managed in a proper manner. In this way, the
company can make sure that it is able to manage out its resources in an appropriate
manner which will be quite helpful for it in raising the overall level of efficiency and
effectiveness.
Macro-environmental industry issues
Macro-environment of an organization refers to the influence which is created by a range
of factors which thereby impact the industry as a whole in a highly effective manner. Aldi has
faced the following issues in the past-
 Lack of economic growth- In the past Aldi has faced a situation where the economic
growth of the country was comparatively less than what was forecasted (Jabbar and
Hussein, 2017). Therefore, in this way it can be said that this has created an overall level
of impact on the company and the way it manages its various types of resources. Thus,
the company faced this issue by altering its strategy in the right manner so that the lack of
economic growth did not create an impact on its operations.
 Lack of marketability- In the past Aldi has confronted a situation where the
marketability of its products has been impacted due to the impact created by the forces
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(Meyer, Neck and Meeks, 2017). Therefore, in this manner it can be said that this has
affected the level of operations of the company.
 Lack of appropriate awareness- In the past Aldi has been confronted with the issue was
there has been a lack of appropriate awareness regarding the changing needs and
requirements of the customers. This has impacted the company and therefore its overall
level o operations have been impacted.
 Lack of opportunities- In the past Aldi has faced a particular issue where there are lack
of opportunities which are available for it for the purpose of the marketing of its products
and services. This has impacted the company as its level of profits was affected due to
this particular reason and thus due to this reason the company’s level of operations were
also affected.
The response given by Aldi to these issues was as follows-
 Changing strategy- During the time of recession, Aldi made sure that it changed its
strategy so that the needs and requirements of customers could be identified (Misakov
and et.al., 2018). This has helped the company a lot in ensuring that it is able to follow a
right approach so that the attainment of goals and objectives can be done in a proper
manner.
 Developing marketing strategy for the products- Aldi has ensured that it develops a
marketing strategy for the different types of products in the market (Teece, 2019). This
has led towards ensuring that the company is able to manage its wide range of needs and
requirements in a proper manner. This has made sure that the products of the company
are able to reach a broad category of market.
 Increasing the level of awareness- With an increase in the level of awareness the
company has made sure that it is able to be aware about the different types of dynamic
trends which are trending in the market (Pfarrer and et.al., 2019). In this way, this can
help it to be able to adjust itself according to the needs and requirements of these trends
which will be helpful in the attainment of the goals and objectives.
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 Creating opportunities- It is important for the organizations that they are able to create
proper opportunities which will help them to make sure that they can manage out their
products within the market (Pozdnyakova and et.al., 2017). In the context of Aldi, it can
be highly beneficial to make sure that the company can use these particular opportunities
so that it is able to attain the goals and objectives in the short-term, medium-term and
long-term.
Impact of issues of Aldi’s future strategy-
There is an impact which is created by the various types of issues on Aldi’s future
strategy. This has been explained in the following manner-
 In the future, the use of appropriate methods and techniques has to be made by the
managers of Aldi so that they are able to adjust in the right manner with the company and
its policies. This will help a lot in ensuring that the management can take the appropriate
actions so that the profitability level can be enhanced.
 In the future, the managers of Aldi have to make sure that they can judge the competition
in a proper manner and the different types of strategies which are required to be applied
so that the overall level of efficiency and effectiveness can be enhanced in a proper
manner. This will help the management to be able to take the right decisions regarding
the competition level in the market. By using the appropriate strategies, the company will
be able to attain a strategic edge over the various types of competitors in the market in the
right manner for attaining a higher-level of growth in the future.
Determining Porter’s Value Chain framework and VRIO to assess the capability
The idea of value chain is based on the process view of company and idea of subsystem each
inputs, transformation processes and outputs (Bindra, Parameswar and Dhir, 2019). This is
framework for developing the analytical structure that follow the interdependence from the raw
material acquisition or idea through production. In the context of Aldi, this will help in creating
the value and competitive advantage through specific activities. In this porters value chain frame
work , activities are divide into parts primary activities and secondary activities. Following are
the ways-
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Primary activities- These types of activity relate directly to the physical creation sale,
maintenance and support of product and services to build the efficiency in the organisation. They
consist following-
 Inbound logistic- These are kind of processes related receiving, storing and distributing
inputs internally and that lead to increase the effectiveness in the company. This basically
decide the relationship with the supplier to create the overall value. In the context of Aldi,
this will help in developing the effectiveness of logistic and organisation will be easily
able to develop the relationship of supplier (Durand, Grant and Madsen, 2017).
 Operations- These refer to transform of activities that convert the input into output that
are sold to customer. In the context of Aldi, operational system will increase and create
the value and going to enhance the productivity.
 Outbound logistic- These involve delivering products to customer and things like
collection, shortage and distribution system and internal or external organisation. In the
Aldi, this will improve the customer services and satisfaction and will help in building
the delivering service.
 Marketing and sales-This refers to pursuing the customer to buy the products to
purchase. This useful in achieve targets of the company and effective marketing tactic
will help into this. In the context of Aldi, this will help in communication with customer
to relationship and overall sales target to achieve the goals and objective.
 Service- This are the activities that will help in maintaining the value of product or
service to customer after its purchase. In the context of Aldi, this will create the better
image of company in the eyes of customer and will ensure better services.
Secondary services- These are support activities that play role in each primary activity.
Following are-
 Procurement- This relates to the purchasing from the vendor to get the resources and to
operate effectively (Dzwigol, 2020). In the context of Aldi, this will help in making the
negotiating the best price to attain better profit.
 Human resources management- This concern with the process of recruiting, hiring,
trains and motivate the employees to achieve the goals. In the context of Aldi, helps in
create the clear advantage with good HR practice and will able to accomplish the
objective of the organisation.
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 Technological development- This relates to managing and processing the information to
protect the company knowledge base. In the context of Aldi, this will help in decreasing
the cost and to maintain the technical excellence to create the value.
 Infrastructure- This helps the organization to maintain the daily operation such as
accounting, legal, administration and general management. In the selected organization,
this will help in developing the overall productivity and efficiency to achieve the
objective and goals (Hitt and Duane Ireland, 2017).
VRIO framework is important to make the decision regarding the resources and
capability ghat give long-term competitive advantages to the organization. In this there
are number of strategic planning process that will help to understand the marketplace. In
the context of Aldi, this analysis will help in understand the importance of resources of
the company. Following is the analysis of the organization-
Resources Valuable Rare Imitability Organise
Brand
awareness
✓ ✓ ✓ ✓
Financial
resources
✓ ✓ ✓ ✘
Customer
trust
✓ ✓ ✘ ✘
Staff ✓ ✘ ✘ ✘
 Value- This refers to analysis of resources that is rare for the organization or not. In the
context of Aldi, Brand awareness is valuable resources as this helps in recognize the
brand at global level and able to achieve the goal. Financial resources is also value to the
company as through this management can take big step towards future objective.
Customer support and trust is important and organization able to achieve this through
regular service. Staff is essential as this works very hard to achieve the goals and
objective and because this Aldi is top retail supermarket in the UK.
 Rare- This concern with if resources is rare to the company or not. In the context of Aldi,
Brand awareness is rare as not everybody able to achieve the level and could be done by
few only (Makadok, Burton and Barney, 2018). Financial resources is also rare because
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this attain through reputation in global level and having good brand awareness. Apart
from that Customer support is also rare as only popular brand got the trust and
satisfaction from their customer and not all company got this resource. Staff is not rare
resources because all big organization also asses better human resources and has bigger
staff than the Aldi organization.
 Imitability- This resource concern with expensive to duplicate organization’s capability
and resources. In the context of Aldi, Brand awareness can be imitability as many big
retail supermarkets also has the brand awareness. Customer support and staff is not
imitable because this is could be achieve and possessed by few big industry as well in the
market (Pozdnyakova and et.al., 2017). This is easily to be achieve by the companies who
has brand name in the market. Financial resources is depend from one industry to other
and they possess their own kind of financial resources to meet their demands and needs
and hence this is rare resources.
 Organized- This refers to the organized management system, process and structure and
culture to capitalize the resources. In the context of Aldi, Brand awareness is organized
and properly maintained by the company for long period of time. Customer trust is not
effectively organized by the companies as some were approaching another supermarket.
Financial resources is also not efficiently regulated and monitor and has face some
monetary issue for past years. Staff is also not properly hired and recruit and does not
able to satisfy the need and requirement of the customer and face some employees related
in the management by the company.
Analysing of Porters’ generic strategy and Ansoff Matrix
Porters generic competitive strategy refers to the firm’s to pursue the competitive advantage to
wider it scope across the market. In the context of Aldi, it will help in improving the
effectiveness of the organization and develop the efficiency. Following are the strategies-
 Cost leadership strategy- This strategy refers to the winning market share by cost
conscious or price sensitive customer and could be achieve by the lowest prices in the
target market segment or at least lowest price to value ratio. In the context of Aldi, this
strategy helps in achieving the middle class people and useful in attaining the goals.
 Differentiation strategy- This strategy helps in compete successfully to target audience
and market segment to satisfy the needs and requirement (Teece, 2019). In the context of
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Aldi, this strategy will useful in reaching competitive advantages as the organisation able
to achieve the its goals and objective. As, it has been using innovative products line after
studying the consumer growing health concerns.
 Cost Focus- This is third generic competitive strategy that encourages companies to
expand the narrowly target segment and will help in serving the particular market
segment. In the context Aldi, it has used this strategy to take the lower cost advantages
with small market segment. Aldi focuses on emphasis on the adopting over taste, size and
design of the product to match the needs.
 Differentiation focus- The organisation will develop the product within one or smaller
number of market segment and it is most common niche marketing strategy and will
develop the efficiency. In the context of Aldi, this focusing the product attribute to revise
the branding strategy to give continuous change in the product designing and packaging
to satisfy the needs of customer.
Ansoff matrix is strategy tool that developed to facilitate and guide the business in
decision making and growth in the business. Nowadays, every organisation is using this
technique to make future plans and tactics about their goods and services. In the context
of Aldi, this strategic tool has made successful in the global operations and busines based
on its growth choices and decision. Following are the strategy are as follows-
 Market penetration- This strategy concern with using to seek growth for existing
products in the market where brand is existing and operational. In the context of Aldi,
this strategy has developed to increase the production capacity that allow more customer
within the same market. Through this companies increase the frequency of consumption
overall sales volume sold to existing consumer existing consumers
 Market development- This type of strategy included the enhance the business growth
through introducing existing products in new market and will include lots research and
development in the market and in product also (Trigeorgis and Reuer, 2017). In the
context of Aldi, this develop the invest in research into possible new market and
consumer segment for the products. This useful un international expansion and regional
expansion and helps in reaching the new customer segments. This also helps in brand
awareness and customer education that will allow to understand the products and their
offering.
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 Product development- When company expands business growth in existing market
through new market and is called as product development. In the context of Aldi, this
helps the organisation to introduce modification and improvement in existing products to
offer the consumer new and enhance products. This will lead to launch new product and
helps in develop new points of consumer demand and increase breadth of the company.
This will also develop the product quality from the different quality product in same
market and useful in penetrate the new market segment group.
 Diversification- This refers to the business growth and development that occurs when
company engages in new product development in new market and will help in stay
innovative, competitive and competent. In the context of Aldi, this helps in building
overall brand name and reputation in the market. This refers to merger and acquisition to
entering the market segment and will allow new business would involve explore new
business idea and option to launch to acquire for the purpose of growth and development.
The internationalization of Aldi has certain variants and it depend on the effective of the
application of strategy and to analyses their appropriateness include many factor. Some of the
advantages of the strategy are as follows-
 Aldi is quite caution before entering into foreign marker and the result is that firstly it
face certain difficulties and as by the time market become more saturated and matured
more competitors. As, this work positively for the company as they able to achieve and
adopt foreign market in much better manner.
 Apart from that venturing the market like US added to their profit because they become
first to offer the discount and become the first mover advantages (Velikorossov an et.al.,
2020). This could be achieve through proper analyse of market and carefully studying
this also work on the theory of economies of scale and penetrate into new market. Also,
Aldi is well known for its well-considered approach and has proved itself to its rival and
achieve significant position in the market.
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